Dimeco (DIMC) 8-K Dimeco, Inc. Announces 2011 First Quarter Earnings

Exhibit 99

NEWS RELEASE

TO BUSINESS EDITOR

DIMECO, INC. ANNOUNCES 2011 FIRST QUARTER EARNINGS

Honesdale, PA, April 22, 2011/ Dimeco, Inc. (Nasdaq DIMC), parent company of The Dime Bank, reported first quarter 2011 earnings of $1,270,000, an increase of 15.2% over $1,102,000 reported for the first quarter 2010.  A key component of this increase was net interest income, which increased 17.4% in the first quarter of 2011 as compared to that quarter in 2010. As a result, earnings per share were $.79 for the first quarter 2011, representing an increase of 12.9% over the same quarter 2010.  This level of net income provided a return on average stockholders’ equity of 9.93%, and a return on average assets of .94%, for the first quarter of 2011, an increase of 7.8% and 14.6%, respectively, over the first quarter 2010.  Payment of a $.36 per share cash dividend produced a yield of 3.74%.

The Company ended the first quarter 2011 with total assets of $543,331,000, a decrease of 1.8% from the first quarter 2010. This slight decline was part of the strategic effort to increase net interest income. Loans increased $14,798,000 to $422,468,000, a growth of 3.6% over prior year. Deposits ended the quarter at $450,567,000, a slight decrease of 1.5% from March 31, 2010 while stockholders’ equity increased 6.4% to $51,492,000 at March 31, 2011.

Gary C. Beilman, President and Chief Executive Officer, commented “I am happy to say that Dimeco has started the year on several positive notes. Through numerous interest rate repricings on both sides of the balance sheet and our ongoing cost containment efforts, net income is up significantly from last year, along with many of our financial ratios. This is not to say, however, that the continuing economic situation is without its consequences. Non-accrual loans continue to be at a higher level than a year earlier. Restricted cash flows have made it increasingly difficult for certain borrowers to maintain timely payment schedules, adding to nonperforming assets. Our commitment is to continue our efforts to work with all customers, with our primary goal to maintain a strong financial position, while being as fair as possible in dealing with troubled customers.”

The Dime Bank, a wholly owned subsidiary of Dimeco, Inc., serves Wayne and Pike counties in Pennsylvania and Sullivan County, New York.  The Bank offers a full array of financial services ranging from traditional products to electronic banking and wealth management services.  For more information on The Dime Bank, visit www.thedimebank.com.

DIMECO, INC.

CONSOLIDATED STATEMENT OF INCOME   (unaudited)

(in thousands, except per share)	For the three months ended March 31,
	2011			2010
Interest Income
Interest and fees on loans	$	5,445		$	5,481
Investment securities:
Taxable		290			296
Exempt from federal income tax		290			256
Other		15			12
Total interest income		6,040			6,045
Interest Expense
Deposits		1,139			1,796
Short-term borrowings		23			25
Other borrowed funds		219			257
Total interest expense		1,381			2,078
Net Interest Income		4,659			3,967
Provision for loan losses		425			250
Net Interest Income After Provision for  Loan Losses		4,234			3,717
Noninterest Income
Service charges on deposit accounts		271			343
Mortgage loans held for sale gains, net		82			50
Investment securities losses		(2	)		-
Brokerage commissions		181			138
Earnings on bank-owned life insurance		108			106
Other  income		303			324
Total noninterest income		943			961
Noninterest Expense
Salaries and employee benefits		1,777			1,674
Occupancy expense, net		306			305
Furniture and equipment expense		105			118
Professional fees		310			152
Data processing expense		179			187
FDIC insurance		189			177
Other expense		731			587
Total noninterest expense		3,597			3,200
Income before income taxes		1,580			1,478
Income taxes		310			376
NET INCOME	$	1,270		$	1,102
Earnings per Share - basic	$	0.79		$	0.70
Earnings per Share - diluted	$	0.79		$	0.70
Average shares outstanding - basic		1,598,218			1,575,103
Average shares outstanding - diluted		1,600,252			1,575,150

DIMECO, INC.

CONSOLIDATED BALANCE SHEET (unaudited)

(in thousands)
March 31,	2011			2010
Assets
Cash and due from banks	$	4,680		$	4,839
Interest-bearing deposits in other banks		2,660			14,635
Federal funds sold		-			3,000
Total cash and cash equivalents		7,340			22,474
Mortgage loans held for sale		92			-
Investment securities available for sale		82,977			95,369
Loans (net of unearned income of $16 and $74)		422,468			407,670
Less allowance for loan losses		7,115			6,467
Net loans		415,353			401,203
Premises and equipment		10,403			10,781
Accrued interest receivable		1,940			1,806
Bank-owned life insurance		9,778			9,267
Other real estate owned		3,995			1,073
Prepaid FDIC insurance		1,438			2,144
Other assets		10,015			9,129
TOTAL ASSETS	$	543,331		$	553,246
Liabilities
Deposits :
Noninterest-bearing		50,126			43,458
Interest-bearing		400,441			413,904
Total deposits		450,567			457,362
Short-term borrowings		17,908			17,584
Other borrowed funds		19,077			21,947
Accrued interest payable		698			1,031
Other liabilities		3,589			6,910
TOTAL LIABILITIES		491,839			504,834
Stockholders' Equity
Common stock, $.50 par value; 5,000,000 shares authorized;
1,652,318 and 1,650,868 shares issued		826			825
Capital surplus		6,273			6,134
Retained earnings		45,872			42,845
Accumulated other comprehensive income		588			675
Treasury stock, at cost (54,100 shares)		(2,067	)		(2,067	)
TOTAL STOCKHOLDERS' EQUITY		51,492			48,412
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY	$	543,331		$	553,246
This statement has not been reviewed or confirmed for accuracy or relevance by the FDIC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
	(amounts in thousands, except per share)									% Increase
		2011				2010				(decrease)
	Performance for the three months ended March 31,
	Interest income	$	6,040			$	6,045				-0.1	%
	Interest expense	$	1,381			$	2,078				-33.5	%
	Net interest income	$	4,659			$	3,967				17.4	%
	Net income	$	1,270			$	1,102				15.2	%
	Shareholders' Value (per share)
	Net income - basic	$	0.79			$	0.70				12.9	%
	Net income - diluted	$	0.79			$	0.70				12.9	%
	Dividends	$	0.36			$	0.36				0.0	%
	Book value	$	32.22			$	30.32				6.3	%
	Market value	$	38.50			$	34.40				11.9	%
	Market value/book value ratio		119.5	%			113.5	%			5.3	%
*	Price/earnings multiple		12.2		X		12.3		X		-0.8	%
*	Dividend yield		3.74	%			4.19	%			-10.7	%
	Financial Ratios
*	Return on average assets		0.94	%			0.82	%			14.6	%
*	Return on average equity		9.93	%			9.21	%			7.8	%
	Shareholders' equity/asset ratio		9.48	%			8.75	%			8.3	%
	Dividend payout ratio		45.57	%			51.43	%			-11.4	%
	Nonperforming assets/total assets		3.20	%			1.82	%			75.8	%
	Allowance for loan loss as a % of loans		1.68	%			1.59	%			5.7	%
	Net charge-offs/average loans		0.25	%			0.01	%			2,400.0	%
	Allowance for loan loss/nonaccrual loans		56.75	%			83.98	%			-32.4	%
	Allowance for loan loss/non-performing loans		53.31	%			72.30	%			-26.3	%
	Financial Position at March 31,
	Assets	$	543,331			$	553,246				-1.8	%
	Loans	$	422,468			$	407,670				3.6	%
	Deposits	$	450,567			$	457,362				-1.5	%
	Stockholders' equity	$	51,492			$	48,412				6.4	%

* annualized

April 2011

Dear Shareholders:

It is with pleasure that I present this report of Dimeco, Inc. for the first quarter of 2011.  I am happy to say that your Company has started the year on several positive notes.  Through numerous interest rate repricings on both sides of the balance sheet and our ongoing cost containment efforts, net income for this quarter is up a significant 15% over that from last year.  Profitability of this magnitude has, in turn, greatly increased our return on average assets and return on average equity ratios.  Of special note to you, our shareholders, is that stockholders’ equity has grown by more than 6%, and our shareholders’ equity to asset ratio has expanded by over 8%.  All of this news, coupled with a dividend yield of 3.74%, is exciting information to share.

That is not to say, however, that the continuing economic situation is without its consequences.  We completed foreclosure on a commercial real estate property, adding $3 million to other real estate owned and charging off $746 thousand which was included in a specific reserve for that loan.  Two commercial real estate properties comprise the majority of the balance of other real estate owned, one is under agreement of sale with the closing expected to take place during the second quarter and we are aggressively marketing the commercial property which was added in the first quarter.  Non-accrual loans continue to be at a higher level than a year earlier, adding to the deterioration of credit quality ratios.  Restricted cash flows have made it increasingly difficult for certain borrowers to maintain timely payment schedules, adding to nonperforming assets.  As noted in recent quarterly reports, we have greatly enhanced our loan monitoring and collection activities.  We remain prudent and cautious during these uncertain economic times.

Our commitment is to continue our efforts to work with all customers, with our primary goal to produce the best possible results for you, our shareholders, while being as fair as possible in dealing with troubled customers.  We ask that you continue to recommend us for banking and wealth management services, as well as for investment in Dimeco, Inc. stock.  As always, your comments and questions are welcome.

Sincerely,

/s/ Gary C. Beilman

Gary C. Beilman

President and Chief Executive Officer